After the Spring Festival of the Year of the Dragon in 2024, iron ore will be fast, which has attracted great attention from the market. In fact, generally speaking, iron ore after the Spring Festival is generally stronger than before the holiday, and this year's ** volatility performance is different from the past, mainly caused by fundamental pressure. Entering March, it is expected that the pressure on iron ore fundamentals will not continue to expand, so iron ore** is expected to stabilize in March.
On February 19, 2024, China's ** trading opened, and as of February 22**, the ** price of DCE iron ore 2405 contract ** was 8935 yuan ton, 8 yuan more than the opening price of 973 yuan on February 192%。In terms of spot**, the Australian Fines (62%FE) Qingdao Port Forward Spot** Index was 130 on February 18$95 dry ton, 120 on Feb. 22$05 dry tons, **83%。
Data**: Ganglian data.
In fact, since January 2024, the iron ore spot ** index has shown a trend, with an average price of 134 in January$83 dry ton, and the average price in February (as of the 22nd) was 126$89 dry tons, 59%。During the period from January 22 to January 30, the iron ore was driven by the pre-holiday reserve of the steel mill, and then recovered.
For the Chinese market, the Spring Festival is an important node. Due to the suspension of steel mills before the Spring Festival, the production of molten iron during this period declined, the demand for iron ore weakened, and after the Spring Festival, steel mills resumed production one after another, the output of molten iron rebounded, the demand for iron ore increased, and the market's confidence in the New Year was also relatively sufficient, so generally speaking, iron ore after the Spring Festival will be slightly higher than before the holiday, during the period from 2017 to 2023, only 2020 is not the case, mainly because of the disturbance of the new crown epidemic that year, there is no condition for resumption of work and production after the Spring Festival.
Iron ore in the week after the holiday this year**, mainly for the following reasons:
1) High port inventory。Starting from October 2023, the port inventory of imported mines has shown an upward trend as a whole, but it is still at a low level compared with the same period in previous years, but by mid-to-late February, the port inventory was close to 1400 million tons, which is comparable to the level of the same period last year, and high inventories have put pressure on iron ore**.
In terms of steel mill inventory, there was an obvious accumulation of inventory in January, but the inventory began to decline in February, indicating that the steel mill preparation was completed and the purchase of iron ore was slowed down. After the Spring Festival, the inventory level of steel mills did not change much, mainly due to the fact that production and sales were at a low level, and steel mills did not prepare warehouses for subsequent production, resulting in a continuous increase in port inventory.
Data**: Ganglian data.
2) Imports of ore** increased。Since January, the arrival of imported ore has continued to be high, and ** is relatively sufficient. In the case of declining consumption during the Spring Festival, the arrival of iron ore in Hong Kong even increased, which exacerbated the inventory pressure.
Data**: Ganglian data.
3) The recovery of molten iron is less than expected。Whether from the perspective of the lunar calendar or the solar calendar, the current recovery of hot metal production is significantly weaker than last year. In the 8th week of 2024 in the solar calendar, the first week after the Lunar New Year, the average daily output of molten iron of 247 steel mills is 22350,000 tons, a year-on-year decrease of 45%, a year-on-year decrease of 16%。
Data**: Ganglian data.
The main reason why the output of molten iron is lower than expected is that the current steel mills lack the motivation to resume production under the condition of insufficient profits. As of February 22, 2024, the blast furnace thread lost 20657 yuan ton, the lowest profit value in the same period in recent years. In fact, since the second half of 2023, the profit of blast furnace threads has continued to hit a new low in the same period in recent years, steel mills have suffered long-term losses, and their confidence in the recovery of demand after the holiday is also insufficient, and the momentum for resumption of production after the Spring Festival is insufficient. This week (219-2.23) The blast furnace operating rate of 247 steel mills in China is 7563%, down 535 percentage points, which is the low level in recent years.
Data**: Ganglian data.
At present, the output of molten iron is at a low level, mainly due to the slow resumption of production of steel mills, but in March, the downstream gradually resumed work, and the demand for steel will recover, driving the recovery of molten iron production, which is expected to reach the level of 2.32 million tons, an increase of 80,000 tons a day, an increase of 36%。* In the first three weeks of February, the shipment volume of iron ore from Australia and Pakistan was 68.58 million tons, an increase of 3 million tons or 46%, of which the iron ore sent from Australia to Chinese ports increased by 2.47 million tons month-on-month, an increase of 62%。
It is expected that the arrival of imported ore in March will rise by about 3 million tons, and the recovery of hot metal production will drive the rise of iron ore consumption by about 3.5 million tons. On the whole, the fundamental pressure has decreased, which has formed a certain support for the rebound of iron ore.
Data**: Ganglian data.
It is worth noting that from the second half of November 2023, Brazil's iron ore shipments have increased, and until February 2024, shipments have remained at the highest level in recent years. This is mainly due to the gradual recovery of the northern Vale system in Brazil from the tailings accident, and the capacity utilization rate has rebounded to around 70% since the fourth quarter of 2023, while the equipment upgrade of the southeastern system has improved the beneficiation efficiency, which has greatly strengthened the iron ore production in Brazil, and the production of Vale in 2023 will increase by more than 13 million tons year-on-year. It is expected that in the future, Brazil's iron ore will be relatively sufficient, Australia's iron ore will be relatively stable, and the overall pattern of iron ore will tend to be slightly looser, so the iron ore center may decline in the long run.
In terms of steel, iron ore is gradually stabilizing, double coke is expected to shrink in Shanxi coking coal, and raw materials in March form a certain support for steel costs, coupled with the macro sentiment in March is expected to be warm, and black commodities are expected to run strongly in March.